In its
objections, HP argues that the Magistrate Judge erroneously
found that 35 U.S.C. § 315(e)(2) “applies to
invalidity grounds based on patents that were never advanced
in any [inter partes review (“IPR”)]
petition filed against U.S. Patent No. 6, 218, 930.”
Docket No. 1005 at 2. According to HP, the Report
“misreads the statute and applies estoppel to any
ground that the petitioner raised or reasonably could have
raised in its petition for IPR (as opposed to during an
IPR).” Id. HP's argument focuses on the
phrase “during that IPR” in the estoppel
provision, arguing that, during an IPR, a petitioner can only
present grounds that have been instituted in the petition.
Id.

The
Court agrees with the Magistrate Judge that the plain
language of § 315(e)(2) suggests that estoppel applies
to non-petitioned grounds-grounds that a party failed to
raise in an IPR but reasonably could have done so. The
statute provides that a party is estopped from asserting at
trial invalidity grounds that it reasonably could have
raised during an IPR, and non-petitioned grounds that
could have been included in an IPR petition are precisely
those grounds. Limiting estoppel as HP proposes would
frustrate the litigation efficiencies the America Invents Act
was designed to produce and calls into question this
Court's decision to stay this case pending
IPR.[1]See Docket No. 410; NFC Tech. LLC v. HTC Am.,
Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *4 (E.D.
Tex. Mar. 11, 2015) (“Giving the agency the authority
to consider the validity of patents in the inter
partes review process was designed in large measure to
simplify proceedings before the courts and to give the courts
the benefit of the expert agency's full and focused
consideration of the effect of prior art on patents being
asserted in litigation.”); Cobalt Boats, LLC v. Sea
Ray Boats, Inc., No. 2:15CV21, 2017 WL 2605977, at *3
(E.D. Va. June 5, 2017) (“It would waste this
Court's time to allow a stay for a year during IPR
proceedings and then review invalidity arguments that
Defendants could (and perhaps should) have raised in their
IPR petition.”). Moreover, applying estoppel only to
instituted grounds would effectively read out the
“reasonably could have raised” language from the
statute. See Oil-Dri Corp. of Am. v. Nestle Purina
Petcare Co., No. 15-CV-1067, 2017 WL 3278915, at *8
(N.D. Ill. Aug. 2, 2017) (“Under Purina's reading
of the statute, the ‘reasonably could have raised'
language would come into play where a petitioner raises a
ground in a petition, the PTAB institutes IPR on that ground,
the petitioner abruptly changes course and fails to pursue
that ground before the PTAB post-institution, and then later
the petitioner changes course once again and seeks to raise
that invalidity ground in federal court. The Court has
difficulty understanding why a party would pursue such a
strategy.”).

The
Court is not persuaded by the reasoning in the cases holding
to the contrary. See Verinata Health, Inc. v. Ariosa
Diagnostics, Inc, No. 12-CV-05501-SI, 2017 WL 235048, at
*3 (N.D. Cal. Jan. 19, 2017) (“limiting IPR estoppel to
grounds actually instituted ensures that estoppel applies
only to those arguments, or potential arguments, that
received (or reasonably could have received) proper judicial
attention.”); Intellectual Ventures I LLC v.
Toshiba Corp., 221 F.Supp.3d 534, 553-54 (D. Del. 2016)
(“Although extending [Shaw's] logic to
prior art references that were never presented to the PTAB at
all (despite their public nature) confounds the very purpose
of this parallel administrative proceeding, the court cannot
divine a reasoned way around the Federal Circuit's
interpretation in Shaw.”)

Additionally,
HP argues the fact that it joined Avaya's already
instituted IPR is relevant to the analysis. Docket No. 1005
at 4. According to HP, “[p]ublic policy weighs against
adding new prior art to an IPR that is already instituted
with the expectation that the new prior art will be saved
from estoppel based on the PTAB not instituting on the new
prior art.” Id. at 4.

The
fact that HP sought joinder with Avaya's IPR does not
mean that HP could not have reasonably raised different
grounds from those raised by Avaya, and whether to join an
IPR and assert identical or different prior art-with the
associated estoppel ramifications-was a decision for HP to
make. Indeed, “[a]llowing [HP] to raise arguments here
that it elected not to raise during the IPR would give it a
second bite at the apple and allow it to reap the benefits of
the IPR without the downside of meaningful estoppel.”
Parallel Networks Licensing, 2017 WL 1045912, at
*12.

Finally,
at issue in Network-1's motion are the specific
invalidity grounds: (1) obviousness over Lehr (U.S. Patent
Nos. 6, 473, 608; 6, 643, 566; 7, 466, 819) in view of
Woodmas (U.S. Patent No. 5, 345, 592) and Chang (U.S. Patent
No. 5, 991, 885 and WO 98-57248) and (2) obviousness over
Yano (U.S. Patent No. 6, 246, 748) in view of Woodmas. Docket
No. 811 at 6. HP knew of each reference before it filed its
IPR. Indeed, HP disclosed each reference in its invalidity
contentions on December 19, 2012 (Docket No. 811-2)-almost
eight months before HP filed its IPR on August 6, 2013
(Docket No. 811-5). Accordingly, the Court agrees with the
Magistrate Judge that HP reasonably could have raised each
invalidity ground before the PTAB and should be estopped from
asserting obviousness (1) over Lehr in view of Woodmas and
Chang and (2) over Yano in view of Woodmas at trial. HP's
objections are OVERRULED.

CONCLUSION

Having
reviewed the Report de novo and for the reasons set
forth above, the Court OVERRULES HP's
objections regarding estoppel. The Court
ADOPTS the findings and conclusions of the
Magistrate Judge as those of the Court. In light of the
foregoing, it is ORDERED that
Network-1's Motion for Partial Summary Judgment of
Estoppel (Docket No. 811) is GRANTED.
Accordingly, HP is estopped from asserting the following
obviousness arguments at trial: (1) obviousness over Lehr in
view of Woodmas and Chang; and (2) obviousness over Yano in
view of Woodmas.

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